Can Olmert and Abbas deliver at high-stakes Annapolis summit?

In the final run-up to the Annapolis peace parley, leaders on all sides are emphasizing the burning need for success and the potentially huge price of failure. Although the focus is on the Israeli-Palestinian conflict, all the main players see it as only a small part of a much bigger regional drama: the ongoing battle for regional sway between the moderate Middle Eastern camp, led by America, and the radicals, led by Iran.

The stakes are high: the price of oil, the future of Iran's nuclear program and America's exit strategy from Iraq are all part of the wider equation.

Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas are well aware of the stakes; but, for domestic reasons, both are too weak to deliver a peace agreement that would spell unqualified success at Annapolis.

Instead, both are looking for a formula that papers over their political difficulties and keeps the momentum going. They have therefore agreed to redefine Annapolis as a launching pad for intensive negotiations rather than a forum for the end game.

For lack of choice, the United States is going along with the low-key approach. But the Americans remain keenly aware of the underlying regional issues that they were hoping the parley would help them shape.

Speaking in Jerusalem Sunday, U.S. Secretary of State Condoleezza Rice made the connection between violent ideologies sponsored by Iran or linked to Al Qaeda and success or failure on the Israeli-Palestinian track. She warned that if Palestinian leaders are unable to deliver on hopes for an independent state, then "the moderate center could collapse forever and the next generation of Palestinians could become lost souls of unbridled extremism."

"If we don't act now to show the Palestinians a way forward, others will show them a way forward," she declared. Therefore, she concluded, "failure is not an option."

When President Bush launched the Annapolis initiative in mid-July, he had hoped for more. The idea was that a deal between Israel and Palestinian moderates would mobilize a grand coalition of moderate Arab and Muslim countries, from Egypt to Indonesia, to help turn the tide against the radicals, facilitate a U.S. exit strategy from Iraq and increase pressure on Iran to freeze its nuclear weapons program.

Now much will depend on the degree to which the United States is able to sell the more modest Israeli-Palestinian peace effort as a significant breakthrough.

For Israel, success will be simply to keep the process going. Olmert's dilemma is how to do enough to keep the Palestinians interested without alienating the hawks in his coalition. For now he seems to have come up with a winning formula:

"All the fundamental questions, the substantive issues, all the historical questions burdening our debate, are on the agenda," he declared, which is music to Palestinian ears. To reassure the hawks, he insisted that there would be no prior agreements, and that Annapolis itself would only be a launching pad for an intensive negotiating process, the outcome of which was not guaranteed.

Then again, he intimated that the aim would be to wrap up a peace deal before Bush leaves office in January 2009, giving the Palestinians something akin to the timetable they have been insisting on.

Success on the Israeli-Palestinian track would mirror the wider regional picture and hurt Palestinian radicals, says Ami Ayalon, a minister without portfolio and former head of the Shin Bet Security Service. He estimates that it could even lead to a split in the radical Hamas, with some Hamas leaders trying to get aboard the peace train.

On the other hand, should the Annapolis process fail, Abbas may have to turn with cap in hand to Hamas, or even lose his job. Hamas would become the major force in the West Bank, as well as Gaza. To prevent this dangerous outcome for Israel, Ayalon proposes an intensive six-month negotiating process with both sides determined to reach a permanent peace deal that would make Hamas virtually irrelevant.

The Iranians are doing all they can to torpedo the processes that could hurt them and marginalize their proxies. U.N. observers recently confirmed that they have supplied Hezbollah -- now ensconced in central Lebanon behind the Litani River -- with long-range missiles that can reach Tel Aviv and beyond. The Iranians also continue to supply massive arms to Hamas and Islamic Jihad and are training their militiamen.

The game-breaker could be Syria. The biggest coup for America and Israel would be to pry Damascus away from the Iranian-led radical axis. After months of consistently dismissing Syrian overtures as immature or insincere, both Israel and the United States seem to be reappraising their approach.

Rice met Syrian Foreign Minister Walid Mualem in Turkey on her way to Jerusalem, presumably to urge the Syrians to come to Annapolis. More importantly, Israeli intelligence now says Syria's President Bashar Assad is "psychologically ready" for peace with Israel. Even the Mossad, which until recently advised the government against opening talks with Damascus, says that ever since the early September bombing of a nuclear facility in northern Syria, Assad has been displaying a newfound maturity.

Syria moving across to the moderate side of the equation would fundamentally alter the moderate-radical balance. It would have major ramifications for the Iranian, the Iraqi and the Lebanese theaters.

One of the signs that things on the Israeli-Palestinian track could be more serious this time is the fact that after years of quiet, right-wing settlers have again started demonstrating. Although there have been no deals with the Palestinian moderates as yet and Olmert has promised nothing more than to negotiate in good faith, the settlers are convinced that major Israeli concessions are in the offing.

Annapolis and the months following will tell how good the settlers' antennae are. They realize the importance the Americans attach to the wider regional developments and the linkage they are making between them and the Israeli-Palestinian track. Therefore, the hawkish folks maintain, Olmert is walking straight into a trap: Either he will be forced to succumb to American pressure for concessions or be blamed for failure.

Doves and hawks see opposite sides of the big picture: For the doves, progress with the Palestinian moderates is the key to regional stability; for the hawks, the attempt to engage the moderates is bound to fail and to exacerbate regional tensions.

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